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Why Alexandria Real Estate Equities (ARE) is a Top Dividend Stock for Your Portfolio

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Alexandria Real Estate Equities in Focus

Headquartered in Pasadena, Alexandria Real Estate Equities (ARE) is a Finance stock that has seen a price change of -5.74% so far this year. The life science real estate company is currently shelling out a dividend of $1.27 per share, with a dividend yield of 4.25%. This compares to the REIT and Equity Trust - Other industry's yield of 4.76% and the S&P 500's yield of 1.59%.

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Taking a look at the company's dividend growth, its current annualized dividend of $5.08 is up 2.4% from last year. In the past five-year period, Alexandria Real Estate Equities has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.41%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Alexandria Real Estate Equities's payout ratio is 57%, which means it paid out 57% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for ARE for this fiscal year. The Zacks Consensus Estimate for 2024 is $9.46 per share, which represents a year-over-year growth rate of 5.46%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ARE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

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Alexandria Real Estate Equities, Inc. (ARE) : Free Stock Analysis Report

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Zacks Investment Research